Further interest in Summer stake

25 April 2012

An Ohio-based public power supplier is now interested in taking a minority interest in Santee Cooper's share of the two new reactors under construction at the VC Summer plant in South Carolina. A wholesale electricity supplier in Mississippi is already discussing buying into the new units.

American Municipal Power (AMP) has signed a non-binding letter of intent with Santee Cooper which provides for negotiations through which AMP could buy a stake of between 2% and 5% in the new units. It also allows AMP to perform additional analysis and due diligence. No financial terms were disclosed.

AMP - based in Columbus, Ohio - is a nonprofit wholesale power supplier for municipal electric systems. It serves 129 member utilities in Ohio, Pennsylvania, Michigan, Virginia, Kentucky, West Virginia and Delaware, which together serve some 600,000 customers.

Santee Cooper holds a 45% ownership interest in the two 1117 MWe AP1000 reactors being built at Summer, with the remaining 55% being held by South Carolina Electricity and Gas (SCE&G). Santee Cooper - South Carolina's state-owned electric and water utility - began its on-going evaluation of the size of its stake in the new Summer units in 2010.

Last week, Santee Cooper announced that it had signed a letter of intent with South Mississippi Electric Power Association (SMEPA) which provides for negotiations for the development of a power purchase agreement under which SMEPA would buy between 2% and 7% of the capacity and energy output from the new Summer units. In addition, the power purchase agreement would include an option for SMEPA to purchase an undisclosed portion of Santee Cooper's 45% ownership interest.

In July 2011, Santee Cooper signed a similar letter of intent with Duke Energy, under which Duke could negotiate to take a 5%-10% stake of the capacity and output from the new Summer units (about 10%-20% of Santee Cooper's ownership interest in them). It had yet another letter of intent in March 2011 with Florida-based Orlando Utilities Commission for a similar proportionate share of the capacity and output from the two units. However, a spokeswoman for Santee Cooper recently told Reuters that negotiations with the Florida Municipal Power Agency and the Orlando Utilities Commission had ended without any agreements, but talks with Duke are ongoing.

SCE&G and Santee Cooper received final regulatory approval earlier this month for the construction of two Westinghouse AP1000 units at the Summer plant, when the US Nuclear Regulatory Commission decided to issue combined construction and operating licences (COLs) for the reactors. Delays in securing the COLs - SCE&G had anticipated receiving approval in 2011 - have led to a rescheduling of completion dates for the units and to issues with early cost overruns which have recently been settled in an agreement between SCE&G and the Westinghouse-Shaw consortium. The new units are now expected to enter operation in 2017 and 2018.